CDFI Coalition Endorsed Bipartisan Bill to Support CDFIs Reintroduced in Senate
On Wednesday, May 4, Senators Mark Warner (D-VA) and Mike Crapo (R-ID) reintroduced the Scaling Community Lenders Act (S. 1442). This legislation is identical to a bill introduced by the Senators in the last Congress.
S. 1442 authorizes new resources to activate and fund the CDFI liquidity enhancement program, Section 113 of the Riegle Act of 1994. The bill also authorizes the CDFI Fund to finance organizations to purchase or participate in loans made by CDFIs, provide guarantees, loan loss reserves, and other credit enhancements to CDFIs, and to take measures to improve the liquidity of CDFIs.
The Scaling Community Lenders Act further authorizes $100 million for awards to qualified organizations, with the principal purpose of promoting community development, to carry out the liquidity enhancement program. Priority is given to organizations with a track record of purchasing or participating in loans from CDFIs, the ability to leverage federal funds, and organizations with either a wide geographic coverage area or serve borrowers with unmet capital or financial service needs. An unspecified portion of these authorized funds must be used to complete a study on other liquidity and secondary market opportunities by the Treasury Department.
“Since the advent of the economic crisis prompted by the pandemic, CDFIs have been on the frontlines of providing technical and financial assistance to small and minority-owned businesses. CDFIs fill a vital niche in the nation’s financial services delivery system by service communities and market sectors that conventional lenders cannot – with the ultimate goal of bringing CDFI customers into the mainstream economy as bank customers, homeowners, and/or entrepreneurs” says Ceyl Prinster, Chair of the CDFI Coalition and President and CEO of the Colorado Enterprise Fund. “[The CDFI Coalition] believe[s] that the Scaling Community Lenders Act will enhance the ability of CDFIs to support economic revitalization in economic distressed rural, urban, minority, and tribal communities. Establishing a secondary market for CDFI loans will increase the availability of capital to CDFIs that will put it to good use in financing affordable housing, small businesses, and community facilities.”
Senator Warner said, “CDFIs can play a crucial role in driving economic growth and providing access to capital to underserved communities. I’m pleased to reintroduce this legislation that supports new and innovative approaches in the industry and lays the groundwork for new ways to meet the needs in low- and moderate-income communities.”
Senator Crapo added, “I am proud to support the Scaling Community Lenders Act, which will help provide access to capital in low-income, rural, and underserved communities. CDFIs play an important role in our state and nationwide, and this bill will help them expand their lending activities.”
The bill has also been endorsed by several CDFIs and community development advocacy groups, including the Opportunity Finance Network, Community Reinvestment Fund, USA, and LISC. Read the full press release from Senator Warner here.
Next Steps: The bill was referred to the Senate Committee on Banking, Housing and Urban Affairs. It currently awaits consideration.